S. 32 : Depreciation-Goodwill arising on amalgamation-Excess consideration over net assets acquired-Depreciation allowable. [S. 32(1(ii), Companies Act, 2013, S. 230, 232]
Pursuant to the amalgamation of Precious Trading & Investments Ltd. with the assessee, the excess consideration over the net assets acquired was recognised as goodwill on the basis of the valuation report and the scheme approved by the NCLT. The Assessing Officer disallowed depreciation on the ground that the amalgamating company was not carrying on business and that the goodwill was merely a balancing entry. The Tribunal held that the Assessing Officer had ignored the approved scheme of amalgamation and the valuation report, which had not been challenged by the Revenue at the relevant stage. Following CIT v. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) and CIT v. Aditya Birla Nuvo Ltd. (2017) 246 Taxmann 202 (Bom), the Tribunal held that excess consideration over the net assets acquired on amalgamation constituted goodwill, being an intangible asset eligible for depreciation under section 32(1)(ii). The order of the CIT(A) allowing depreciation of Rs. 18,47,57,203 was upheld, and the Revenue’s ground was dismissed. (A.Y. 2020-21) (ITA No. 6204/Mum/2025, dt. 24-08-2026)
ACIT v. Sheth Developers Private Limited (Mum)(Trib) [www.itatonline.org].
[Coram : Hon’ble Justice (Retd.) C. V. Bhadang, President & Hon’ble Shri Prabhash Shankar, AM]